Edward L. Provost and Vicky L. Provost - Page 20




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          “A true lender is concerned with interest.”  American Offshore,             
          Inc. v. Commissioner, supra at 605 (citing Estate of Mixon v.               
          United States, 464 F.2d at 409).  The failure to insist on                  
          interest payments indicates that the payors expect to be paid out           
          of future earnings or through the increased market value of their           
          equity interest.  See American Offshore, Inc. v. Commissioner,              
          supra at 605 (citing Curry v. United States, 396 F.2d 630, 634              
          (5th Cir. 1968)).                                                           
               The alleged debt in this case was to be paid, if at all,               
          from the proceeds generated when the Corbin project was sold.               
          Although petitioner claims that interest was due and would be               
          paid at that time, the critical fact is that Mr. Magness’                   
          obligation to make any payment to petitioner was contingent on              
          the liquidation of the Corbin properties.  Mr. Magness simply was           
          not required to pay for the ongoing use of petitioner’s money as            
          one would expect Mr. Magness to do if the advance were a bona               
          fide debt.  Although the advance was dressed up to look like a              
          short-term debt payable in 1 year, petitioner and Mr. Magness did           
          not intend it to be so, nor did they treat it as such.  We                  
          conclude, therefore, that this factor favors respondent’s                   
          position.                                                                   
          11. Ability To Obtain Loan From Outside Lending Institutions                
               "[T]he touchstone of economic reality is whether an outside            
          lender would have made the payments in the same form and on the             






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